Economic Policy

Brief #114—Economics
By Rosalind Gottfried
Americans owe 1.7 trillion dollars in student debt.  This figure represents an increase of 102% from 2010.  The issue is seen by many as one of racial and economic equity.  This is because the greatest portion of student debt accrues to lower and middle income students and to students who are Latinx , African American and/or women.  Twenty five percent of African Americans and twenty percent of Hispanic Americans are behind in their debt payments.  Students of color are also more likely than other bearers of student loans to have left school without a degree or to have jobs where their pay is not commensurate with the average college graduate’s pay scale. 

President Biden’s recent corona virus relief bill provided for a moratorium on loan payments until September 30, 2021 and exempted them from accruing interest during that time period.   He has also exempted debt forgiveness or cancellation from being taxed.  At the same time, a recent US Court of Appeals ruling has made it more difficult to excuse student loans if a person declares bankruptcy.  This would not impact a one-time loan cancellation but applies to people making payments on existing loans which would not be canceled under a new guideline.

Brief #113—Economics
By Rosalind Gottfried
Biden is proposing an ambitious two part tax plan to expand the American economy.  The cost will be 2.3 trillion dollars and it will make America more competitive, create jobs, re-establish the infrastructure and help Americans’ quality and standard of living. Biden’s plan is in direct opposition to the prior administration’s massive budget cuts of 2017; that plan benefited only the wealthy and failed to produce promised increases in business investments.  The Trump administration cut corporate taxes to 21%, down from 35%.  Biden will increase them to 28%.  In 2020 the fortune 500 companies paid 11.3% in income taxes and many companies paid nothing; for example, Amazon, Chevron, IBM, and Halliburton.  In addition to raising the corporate tax level the plan will stop multinational corporations from avoiding taxes on overseas profits, instead treating them as if they were domestic income.  It will establish an effective minimum tax on foreign investment.  A large part of this increase will fall to “foreigners” who comprise 40% of shareholders.  This will fund phase one of the program which will focus on infrastructure development in highways; mass transit; broadband access; support for electric vehicles; and veteran hospitals.  It will also address research and development to fund home healthcare for the elderly and the disabled, an expenditure that can be reduced significantly by keeping people at home rather than institutions.

Brief #112—Economics
By Rosalind Gottfried
Biden’s 1.9 trillion dollar American Rescue Plan is viewed as adding to the already ballooning federal deficit.  Certainly the pandemic has added to that burden but the structural issues go much deeper than the necessary expenditures to address the desperate economic  situation which befell many Americans.  The deficit is expected to reach 35 trillion dollars by the end of the 2021 fiscal year; it stood at 28 trillion prior to the latest stimulus.  In the first five months of the fiscal year the deficit was 68% greater than for the same time in the previous year.

Brief #111—Economic
By Rosalind Gottfried
President Biden’s 1.9 trillion dollar American Rescue Plan contains the most comprehensive anti-poverty program since President Johnson’s War on Poverty in the 1960s.  The program will reduce overall poverty by one third and child poverty by one half.  Poverty is expected to be reduced to 8.7% for the year compared with 13.7% previously.  The effect on Black and Hispanic families will be even greater bringing 38% of Black families and 43% of Hispanic families out of poverty while affecting more than one half of the children in these demographics.  This wide ranging program attacks poverty from multiple sources though it contains one time payments and policies which will expire at the end of 2021; nothing in the program extends into 2022 at this time.

Brief #1—Agriculture
By Katherine Cart
Farmland is lucrative. Acreage denotes wealth and provides multi-generational investment returns. Racial inequity and farm policy, in this country, have long been indivisible; discrimination in agrarian land ownership and by the USDA has made a farce of an already flimsy bid for equality, for financial freedom and freedom to farm and ranch American land with the nonpartisan support of government. The Covid-19 pandemic has both exacerbated and highlighted the racism within the USDA’s treatment of farmers. Two bills, the Emergency Relief for Farmers of Color Act and the Justice for Black Farmers Act seek to begin the remediation of racial disparity in US agriculture.

Brief #110—Economics
By Rosalind Gottfried
The debate regarding the efficacy of a $15 minimum wage is heating up since Biden included it in his Corona virus stimulus package.  The bill would have a gradual phasing in of the wage over the next four years.  Currently, it would be $9.50 and go to $11, then $12.50, then $14 annually until it reaches $15 in 2025.  Future increases would be tied the median wage rate, thereby assuring the consistent value of the minimum wage. 

The consequences of the increase are debated and the research demonstrates some mixed outcomes but overwhelmingly it supports the increase.  Most show it does not actually decrease jobs. One study shows no impact on jobs in 138 state and local areas, over five years and another shows no impact in thirty years. One analysis of 60 studies of wages and jobs shows no net loss of jobs.  Increased wages actually are more likely to increase jobs due to the enhanced purchasing power of the lowest income groups.  More money would be spent in local businesses and services, increasing revenue and creating jobs. 

Brief #109—Economics
By Rosalind Gottfried
President Biden seeks to raise the child tax credit to $3600 for children under 6 and to$3000 for school age children under 18.  This is up from the current level of $2000 per child.  As part of the stimulus, this change would become effective in July and last for one year though many Democrats would like to see the change made permanent.   The credit would be available to individuals making $75,000 or less and couples making $150,000 or less.  It would be based on income data from 2019 or 2020.  To increase the effectiveness of the tax break, families could receive monthly payments of between $250 and $350 to meet their routine bills.  Researchers at Columbia University estimate that this measure could reduce the child poverty rate by close to 50%.  The proposal gained support with the weak jobs report released last week.  The cost of the program would increase the federal deficit by 120 billion dollars.

Brief #108—Economics
By Rosalind Gottfried
With the roll out of COVID 19 vaccinations, and the Biden administration’s pledges to speed their dissemination, it might be imagined that the drug companies are reaping enormous profits.  This would be, in large part, an incorrect presumption.  Because many of the pharmaceutical companies took money to develop the vaccine, there are limits on how much they can charge for the product.  Pfizer, one of the first to bring a successful vaccine to market, did not take government funds for research and development of the vaccine; they did join Operation Warp Speed, at a cost of $1.95 billion to the government to provide the first batch of 100million free to the public.  They will charge the government $39.99 per two dose protocol.  While the vaccine costs $15 per person to produce, there are also shipping, administration, and distribution costs.  They are expected to sell $14bn orth of vaccine in the first year. 

Brief #107—Economic Policy
By Rosalind Gottfried
In addition to his $1.9 trillion stimulus plan, now being debated in Congress, President Biden has signed  a number of Executive Orders  affecting the  well-being of struggling Americans.

These included a request that the Department of Education further suspend student loan payments to alleviate the burden on debt carrying graduates.  He also requested the suspension of evictions and foreclosures on 44 million rental units across the country.

Brief #106—Economics
By Rosalind Gottfried
State and local government budgets provide the bread and butter of fiscal life and, because of the pandemic costs, require a federal infusion of aid to accomplish maintenance of essential services.  State and local governments provide major funding for infrastructure, services, and education.  They outspend the federal government on goods and services and account for 15% of the GDP.  They contribute more than 90% of the moneys for education and 80% of transportation spending.  State Medicaid costs have been on the rise, especially in Republican states that did not take advantage of federal extensions of benefits to states. State and local entities employ more people than domestic manufacturing and and  have lost 1.3 million jobs since March, representing the smallest workforce since 2001.  These are budgetary elements which impact the availability of goods and services which contribute to quality of life, such as police, fire, and waste services. 

Brief #104—Economic
By Rosalind Gottfried
President elect Joe Biden’s 1.9 trillion dollar stimulus plan provides a comprehensive assault on what ails America and reinstates some of the controversial elements rejected by Republicans in the $900 billion December plan.  Most notable is a reinstatement of 350 billion dollars to bolster state and local budgets suffering shortfalls largely attributable to the pandemic crisis.  It also includes 400 billion dollars of pandemic aid to vaccinate Americans and open schools.  Biden set a goal to vaccinate 100 million Americans in his first 100 days in office. 

Brief #103—Economic Policy
By Linda F. Hersey
Whether it is culture, policy or innovation, the nation’s most populous state has long been a frontier for change and a reliable predictor of trends for the rest of the U.S. and around the globe.